WEAKER oil prices and signs of a more measured appetite for personal borrowing yesterday combined to push the FTSE 100 Index to its highest level for more than two years.

The Footsie rose 33.7 points to reach 4847.6 as traders returned to their desks after the New Year holidays. That was above the high for last year of 4823.8 and put it on course for its best finish since June 2002.

Sentiment improved after the Bank of England revealed that the value of loans dipped below £20bn in November for the first time in more than two years.

Approvals for home loans also fell to their lowest level for almost a decade as the figures provided further evidence of a slowing housing market and a fresh signal that the next movement in interest rates will be down.

Geoff Langham, head of trading with deal4free.com, said: "The announcement of a sharp fall in UK consumer credit late last year has once again left traders convinced that interest rates will be held at 4.75% for some time and this is buoying London equities."

Investors also took heart from Monday's fall of more than a dollar in the price of a barrel of US light crude to less than $42.

At the same time, the US dollar strengthened against the pound to bounce above the 1.9 mark for the first time since the end of November, trading at 1.8935 by lunchtime.

This boosted exporters and UK companies who generate the bulk of their earnings in the US.

The consensus among traders is for the Footsie to grow by up to 10% this year compared with 7.5% during 2004.

" Economic conditions appeared to be easing but only back to long-term growth rates of around 3% and company earnings were also expected to slow," said Paul Kavanagh, of brokers Killik & Co.